HB1803

Report Title:

General excise taxes; holiday

Description:

Establishes a general excise tax holiday for consumers and businesses for goods and services sold on condition that businesses pass the savings on to consumers.

HOUSE OF REPRESENTATIVES	H.B. NO.	1803
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO A GENERAL EXCISE TAX HOLIDAY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to create an incentive to stimulate consumer spending, restore levels of consumer expenditure.

For a period not to exceed ten days, all sales of retail items would be exempt from the normal retail or general excise tax of four per cent. Because the tax is imposed on the seller rather than the buyer, the only requirement is that the tax savings be passed on to the consumer.

Tax holidays have been used successfully in at least a dozen states and the District of Columbia. For example, Texas lifted its 6.25 per cent state sales tax, along with all local sales taxes, on clothing and footwear. New York and Florida already have similar programs.

More importantly, tax holidays have been found to create sales. Many Texas retailers have reported seeing crowds usually seen only during the Christmas selling season. To accommodate all of the shoppers, stores in Texas adopted extended hours, added staff, and offered special promotions. While depressed sales might be expected before and after a tax holiday, retailers have not noticed lower sales before and after a sales "spike". This measure is intended to exempt grocery items that are purchased with food stamps.

The tax collector is also authorized to receive federal funds if they are available.

A tax holiday would have the effect of stimulating retail sales and giving a boost to our recovering economy. A general excise tax holiday in Hawaii would help both consumers and retailers alike.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Tax holiday. (a) Notwithstanding any law to the contrary, taxes under this chapter shall not be due on retail sales if the sales price of the article is less than $100, if the sale takes place during a period of up to 10 days beginning at 12:01 a.m. on a designated by the Governor; provided that all savings generated by this section shall be passed on by the seller to the purchaser. This exemption shall apply to retail sales only and not to sales on items that will be resold in any manner.

(b) The exemption provided in this section shall apply to each retail sales item that sells for less than $100, regardless of how many items are sold on the same invoice to a customer.

(1) The first $99.99 of an article selling for more than $99.99;

(2) The rental of items that are available within the State for retail sale, including but not limited to clothing, furniture, footware, electronics, and videos;

(3) Taxable services performed on retail items, such as repair, remodeling, or maintenance services and cleaning or laundry services;

(4) Rebates, layaway sales, rain checks, or exchanges when the exchanges occur before or after the tax holiday period;

(5) Mail, telephone, e-mail, or internet orders; or

(6) Food, except those items purchased using food stamps.

(d) Articles that are normally sold as a unit shall continue to be sold in that manner and shall not be priced separately and sold as individual items to obtain the exemption.

(e) If exempt items are sold together with taxable merchandise as a set or single unit, the full price shall be subject to tax unless the price of the exempt item is separately stated. When exempt clothing is sold in a set that also contains taxable merchandise as a free gift, the exempt clothing may qualify for the exemption.

(f) A retailer may offer discounts to reduce the sales price of an item. If the discount reduces the sales price to $99.99 or less, the item shall qualify for the exemption.

(g) The total price of items advertised as "buy one, get one free," or "buy one, get one for a reduced price," shall not be averaged for both items to qualify for the exemption.

(h) Shipping and handling charges shall be included as part of the sales price of the item.

(i) The retailer shall not be required to obtain any special license, permit, or other documentation on sales of eligible items during the exemption holiday period; provided that the retailer's records shall clearly identify the type of item sold, the date the item was sold, and the sales price of the item.

(j) If there is enacted federal legislation that authorizes a limited tax holiday provided a limited period, not extending beyond December 31, 2002, during which this State may suspend the collection of "sales" and "use" taxes, as defined in the same federal legislation, on particular transactions and for which suspended tax collections this State will be federally reimbursed, then the director of taxation is authorized to use federal reimbursement funds to finance the tax holiday.

(k) If the director of the department of budget and finance determines that federal funds are receivable or have been received that are available to pay for the administrative costs of this Act, then those federal monies as the director determines are appropriated and are regarded as immediately available for expenditure for those purposes."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on upon approval.

INTRODUCED BY:	_____________________________